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The 10 Dumbest Banker Quotes of All Time

The Motley Fool is celebrating the Banksgiving season with this tongue-in-cheek series skewering the worst banking offenses. Check it all out by clicking here.

You know what I'm thankful for this Thanksgiving? Bankers. Loudmouth bankers, to be exact. By explaining what they do, defending what they did, and predicting where they're going, we gain precious insight into how the funny little world of banking works.

Culled from a nearly endless pile of fodder, here are the top 10 dumbest banker quotes of all time.

10) "I will hurt the shorts, and that is my goal."-- Former Lehman Brothers CEO Dick Fuld, April 2008

When your lone goal is an egotistical crusade to "hurt" those who see your obvious flaws, bad stuff happens. Had your goal been raising permanent capital, firing those responsible for the mess, and selling bad assets -- or even your entire firm -- things may have turned out differently.

9) "I and so many of us who have been involved in this industry for so long did not recognize the serious possibility of the extreme circumstances that the financial system faces today."-- Former Treasury secretary and Citigroup (NYSE: C) director Robert Rubin.

What's wrong with this quote? Nothing really, save for what Rubin wrote in his memoir five years earlier:

"There is one type of financial risk, the risk of remote contingencies -- which, if they occur, can be devastating -- that market participants of all kinds almost always systematically underestimate. The list of firms and individuals who have gone broke by failing to focus on remote risks is a long one."

8) "It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of these [credit default swap] transactions."-- AIG (NYSE: AIG) financial products head Joseph Cassano, August 2007

And it's hard for us, without being flippant, to say you had even the slightest clue what you were doing.

7)"Our capital position at the moment is strong."-- Former Lehman Brothers CFO Ian Lowitt, five days before the firm filed for bankruptcy.

He was right, actually. But focus on the words "at the moment," because that's what took Lehman Brothers down. When you're reliant on overnight repo financing, as Lehman was, you could go from well-capitalized one moment to set ablaze the next. The fact that Lowitt felt the need to say "at the moment" reiterates this point.

6)"[W]e feel very comfortable that credit quality won't be an issue at Golden West going forward. Even if housing prices drop fairly dramatically, there is plenty of room in their loan-to-value ratio. Yes."-- Former Wachovia CEO Ken Thompson, describing in 2006 the acquisition of Golden West Financial.

Golden West later tore the bank to shreds. Wachovia sold itself to Wells Fargo (NYSE: WFC) late last year for next to nothing. When someone throws in a solitary "yes" to top off an argument, it's time to worry.

5) "Some said we should just stick capital in the banks, take preferred stock in the banks. That's what you do when you have failure. This is about success."-- Former Treasury Secretary Hank Paulson.

Twenty-one days later, Paulson stuck capital in banks and took preferred stock in institutions like Goldman Sachs (NYSE: GS) , Bank of America (NYSE: BAC) , and Morgan Stanley (NYSE: MS) . I guess that meant he officially gave the go-ahead to label our financial system a "failure."

4)"I've known people who worked on the Manhattan Project. And for those of us on that trip, there was the same kind of feeling of being present at the creation of something incredibly important."-- JPMorgan Chase (NYSE: JPM) managing director Mark Brickell, describing a 1994 trip to Boca Raton, Fla., where a group of bankers devised the credit default swap.

3) "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing."-- Former Citigroup CEO Chuck Prince, summer, 2007.

This quote translates to, "Yes, we're toast. But in the meantime, I'm making more money than some small nations. If you'd politely let me enjoy it while it lasts, I'd appreciate it. Thanks."

2) "@*%# you."-- Former Bear Stearns CEO James Cayne, when asked in 1998 to join a Wall Street consortium in bailing out the massive hedge fund Long-Term Capital Management, amid fear its failure would collapse the entire financial system.

Most taxpayers, who 10 years later backstopped Bear Stearns when it needed a bailout and threatened the financial system, only wish they had the opportunity to say the same.

1)"You're approved."-- Loan officers nationwide, circa 2003-2007.

Heckuva job, guys.

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Comments from our Foolish Readers

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I can understand and support the intent in the article but I must say that the bankers that said "you are approved" were mostly "mortgage bankers" and the bankers that so creatively benefited from the crisis were on Wall Street and are called "investment bankers". Community Bankers deserve the acknowledgement of the difference. Although all are not entirely innocent they did not particpate to the scale and scope that the other bankers have and in a large majority are only now affected by the loans made to small and medium sized businesses that are failing due to the current economy. As a long retired community banker, I watched in awe at the process and like my other retired peers are unammused with how the industry is now regulated and who it is that is leading the regulators, more investment bankers.

How did "we're doing God's work" not make the list? Just goes to show why there needs to be salary caps in place so these thieves can't pay each other whatever they want. Either that or they shouldnt be able to cash in their options until 5 years after they leave the company. Lets inject some long term thinking into the equation. I guess the assumes two things they might not be true, that they can think and that they understand how their actions will impact the economy down the road.

Oldbanker, do you really think those community bankers would have said you're approved if they had to keep the loan? I hope your answer is no, and if it is then isn't what they did just money laundering? They didn't make as much money, but are no less guilty for what took place and perhaps more so for originating these loans.

Community banks DO keep their own loans because all have maturities within 10 years. Community banks' niche is not residential mortgage lending.

Community banks are still a contributing factor, though. The problem is the bankers are nearly fools themselves. Very few truly understand how to read financials and only care about historical EBITDA. If EBITDA divided by the loan payment is 1.25:1, then it's approved. Very little weight is given to industry or competitor analysis, and all too often, the "good ol' boy" system is practiced; meaning the CEO says 'just get it done!'

tkell31 - community banks sell very little if any of their loans. residential mortgage companies aren't community banks...

oldbankerbob - bankers are relationship chimps. they are salesman who rarely understand how to read financials. give a banker the EBITDA he wants and he'll give you a loan. he has no idea how to operate your business, how to analyze your industry, or how to even benchmark you against your competitors to see if you know what you're doing. RMA benchmarks mean nothing because they rarely match up with the small business you're underwriting and if you don't like what you see, you simply find a way to mitigate it anyway.

half the underwritings i read in the bank i work for are about as useful as a port-a-potty blown over by the wind.

The biggest turkeys are those who buy stocks for short term gains. Seriously, do you know of any company that starts itself and then evaluates its success or failure within three months? Companies take years to build and your life is years long so if you can't plan it that way then you deserve for your companies to implode.

That is the problem with all of these banks. Most of them were judged by their shareholders on a quarter by quarter basis. People don't trade privately companies and public companies shouldn't be any different.

Community Reinvestment Act was enacted in 1977. In my working copy of US Statutes at Large, Title 12, Banks and Banking, it is coded and indexed as The Community Reinvestment Act of 1977. (The banks also had a spot of trouble in 1978-82, especially savings banks and the hatred of them by career Chase bankster Paul Volcker when he became head of the FED.)

The repeal of Glass-Steagall and the Commodity Futures Modernization Act of 2000 seem to have had a lot more to do with the problems than the CRA. The vast majority of the bad loans were made by private institutions not covered by the CRA. The CFMA is largely responsible for the lack of regulation that allowed AIG to essentially print money via credit default swaps. Must be nice to be able to sell insurance with no requirement to back it with anything at all thanks to the CFMA. Had they not been able to do that, maybe all those crazy derivatives packages wouldn't have been such a great deal. If we hadn't bailed out AIG, that insurance wouldn't have been paid out. So AIG execs were making ridiculous money for years, but when it comes time to cover the downside, well that's left to the taxpayer.